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The idea is that we want more of what nonprofits do. No taxes is an incentive. A nonprofit that turns a profit is presumably putting it to work eventually, suc

The idea is that we want more of what nonprofits do. No taxes is an incentive. A nonprofit that turns a profit is presumably putting it to work eventually, such as adding a new wing. It's not as if they can do stock buybacks because there isn't any. There are many ways this structure is abused but the idea isn't absurd.

lupire 3y ago
I want more of what businesses do. Why are nonprofits special?
- AnthonyMouse 3y ago
  Business expenses are tax deductible too. Businesses essentially only pay income tax on net profit.
hibikir 3y ago
A lot of ideas aren't absurd until they meet reality. The arguments that defend an idea don't really matter in the long run, if we can later see that the outcomes they provide aren't good. I look at one of our local private universities: A non profit with a huge endowment. Their prices keep going up, and then discount enough to make sure the student's price is as heavy as they could possibly bear. They put that money into real estate investment, but they don't actually do anything with the land: It's just always worth more to them than it is to other parties, because they don't pay property taxes. So for them the cost of speculation is the lowest there is. Land speculation is far worse than redevelopment into useful things, but instead, we are rewarding it. So I look at the actual outcomes of the non-profit status, and I don't see how in the world they are good for the area around the university: We are lowering our tax base for the privilege of letting them keep blight around them, which then in return lowers prices, letting them buy even more land at a discount. So I look at the incentive, and I see that it's doing far more damage than what it makes. So it doesn't matter that it sounds good on paper: We shouldn't argue with the reality that is in front of our eyes. We should tax them regardless.
- nobodyandproud 3y ago
  NYU or Columbia?
- AnthonyMouse 3y ago
  > Their prices keep going up, and then discount enough to make sure the student's price is as heavy as they could possibly bear. Isn't this consistent with their mission? If a student comes from millionaires, they can pay the full rate. Others get a discount according to need. > They put that money into real estate investment, but they don't actually do anything with the land This is caused by the opposite of what you're objecting to: What they should be doing is renting out the property and using the revenue to further their mission. But as soon as they do that the state would start collecting both property tax and income tax on the rent, even if 100% of the rental income is going to the non-profit's mission. Between that and the costs of maintaining a rental property, you've made productive use into a net loss and created the perverse incentive to do nothing with the property instead. In theory the "problem" with this is that a non-profit could operate a profit-making business as a funding source, but why is that a problem? If an independent for-profit business can deduct a donation to a charity, why shouldn't a charity be able to deduct a "donation" to itself?
gumby 3y ago
Do we want more of what they do? They don’t have to show a profit — they can continue to lose Korey and get donations. But there’s no need to have a special category.

lupire 3y ago

I want more of what businesses do. Why are nonprofits special?

AnthonyMouse 3y ago
Business expenses are tax deductible too. Businesses essentially only pay income tax on net profit.

hibikir 3y ago

A lot of ideas aren't absurd until they meet reality. The arguments that defend an idea don't really matter in the long run, if we can later see that the outcomes they provide aren't good. I look at one of our local private universities: A non profit with a huge endowment. Their prices keep going up, and then discount enough to make sure the student's price is as heavy as they could possibly bear. They put that money into real estate investment, but they don't actually do anything with the land: It's just always worth more to them than it is to other parties, because they don't pay property taxes. So for them the cost of speculation is the lowest there is. Land speculation is far worse than redevelopment into useful things, but instead, we are rewarding it. So I look at the actual outcomes of the non-profit status, and I don't see how in the world they are good for the area around the university: We are lowering our tax base for the privilege of letting them keep blight around them, which then in return lowers prices, letting them buy even more land at a discount. So I look at the incentive, and I see that it's doing far more damage than what it makes. So it doesn't matter that it sounds good on paper: We shouldn't argue with the reality that is in front of our eyes. We should tax them regardless.

nobodyandproud 3y ago
NYU or Columbia?
AnthonyMouse 3y ago
> Their prices keep going up, and then discount enough to make sure the student's price is as heavy as they could possibly bear. Isn't this consistent with their mission? If a student comes from millionaires, they can pay the full rate. Others get a discount according to need. > They put that money into real estate investment, but they don't actually do anything with the land This is caused by the opposite of what you're objecting to: What they should be doing is renting out the property and using the revenue to further their mission. But as soon as they do that the state would start collecting both property tax and income tax on the rent, even if 100% of the rental income is going to the non-profit's mission. Between that and the costs of maintaining a rental property, you've made productive use into a net loss and created the perverse incentive to do nothing with the property instead. In theory the "problem" with this is that a non-profit could operate a profit-making business as a funding source, but why is that a problem? If an independent for-profit business can deduct a donation to a charity, why shouldn't a charity be able to deduct a "donation" to itself?

gumby 3y ago

Do we want more of what they do? They don’t have to show a profit — they can continue to lose Korey and get donations. But there’s no need to have a special category.